Company formation in Latvia

Company registration in Latvia offers a combination of low tax burden, administrative simplicity, advanced digital infrastructure, and a strategically advantageous geographic location. For entrepreneurs seeking access to the European market and aiming to expand their business opportunities, Latvia provides an ideal environment for doing business.

Company formation in Latvia – advantages of the jurisdiction

Low tax rates:

• Latvia offers one of the most attractive tax systems in Europe: the corporate income tax rate is 0%. At the same time, only distributed profits (dividends) are subject to corporate tax at a rate of 20%, following the Estonian model;
• No withholding tax on dividends: Dividend payments to non-resident individuals and legal entities are not subject to taxation in Latvia;
• Latvia has concluded double taxation treaties with numerous countries, aimed at preventing the simultaneous taxation of the same income in both jurisdictions.

Ease of Registration and Administration:

The company registration process is fast and straightforward, typically taking only a few days provided that all documents are properly prepared.

Digitalization of Processes:

• Latvia has implemented one of the most advanced digital business administration systems in Europe. Many administrative procedures — including the submission of tax returns, financial statements, and registration of corporate changes — can be carried out online.
• The use of electronic signatures significantly simplifies interaction with public authorities.
• Holding a digital signature from one of the Baltic countries (such as an Estonian e-Residency card) provides access to Latvia’s digital services as well. This is particularly useful for remote company registration without the need for a power of attorney.

Support for small and medium-sized enterprises:

The Latvian government actively supports entrepreneurs through various grant schemes and financial initiatives.One such program is “Atspēriens”, which provides grants to promote business development and facilitate the market entry of new products or services. This initiative is aimed at stimulating the growth of small and medium-sized enterprises.

In addition, Latvia participates in international cooperation programs, such as the “SI Baltic Sea Neighbourhood Programme”, offering funding for projects involving Latvian businesses in collaboration with organizations from other Baltic region countries and the EU’s Eastern Partnership.

Possibility of using SIA for holding purposes:

Latvia offers a favorable tax regime for holding companies. In particular, dividends paid by Latvian companies to EU-resident corporate shareholders are not subject to withholding tax, meaning that no tax is withheld at the source in Latvia. Additionally, dividends received by Latvian companies from foreign entities are exempt from taxation, provided that the payer is not a resident of a low-tax jurisdiction.

Types of legal entity forms in Latvia

Several types of legal entities are available for setting up a business in Latvia, each with its own characteristics and legal features. The main forms include:

Limited Liability Company (SIA - Sabiedrība ar ierobežotu atbildību):

• The SIA is a popular choice for small and medium-sized enterprises due to its flexible structure and limited liability protection for shareholders;
• The minimum share capital required is EUR 1 (although we recommend contributing at least EUR 100), which may be paid in cash or in kind;
• Shareholders are not personally liable for the company’s debts beyond the amount of their contributed share capital;
• The company is typically managed by a director appointed by the shareholders.

Joint Stock Company (AS - Akciju sabiedrība):

• The AS is suitable for larger businesses that intend to raise capital through a broader shareholder base.
• Shareholders’ liability is limited to the value of their shares.

There are also general partnerships (PS – Pilnsabiedrība), limited partnerships (KS – Komandītsabiedrība), and sole proprietors (IK – Individuālais komersants). These forms are less commonly used by non-residents for conducting international business compared to the SIA and AS structures.

The following sections will focus specifically on the registration of a Latvian SIA, as it is the most common and widely used form of business entity in Latvia.

Latvian taxation system

Corporate income tax

• Since 2018, all retained (undistributed) profits of corporations in Latvia are exempt from corporate income tax, meaning the tax rate on undistributed profits is 0%.
• When profits are distributed, a 20% corporate income tax is applied. However, the taxable base must be divided by a coefficient of 0.8, which results in an effective tax rate of 25%. For example, in order to distribute EUR 1,000 net to shareholders, the company would need to pay an additional EUR 250 in tax to the Latvian budget.

Capital gains tax – 0% (the 20% tax rate applies only upon profit distribution, such as when dividends are paid).

Capital gains tax is a tax levied on the profit derived from the sale or other disposal of capital assets, such as real estate, shares, or other investment instruments. The capital gain is calculated as the difference between the sale price of the asset and its original acquisition cost.

Dividend tax:

• Payments to non-resident individuals: Dividends paid to non-resident individuals are not subject to taxation in Latvia.
• Payments to non-resident legal entities: Dividends paid to non-resident legal entities are also exempt from taxation in Latvia.

Royalty tax - a 0% tax rate applies to royalties paid to Latvian legal entities and foreign legal entities, except those registered in offshore jurisdictions. For individuals, the tax rate ranges from 5% to 15% depending on the specific case.

Value Added Tax (VAT) rate in Latvia is 21%.

How to register a company in Latvia: step-by-step guide 

For successful business setup in any country, we first conduct an initial consultation to analyze the client’s goals. After a detailed discussion and defining the strategic direction, we proceed with the company registration in the selected jurisdiction.

There are three ways to register a company in Latvia:

1. Remotely:

• By issuing a power of attorney in the country of the future owner's residence;
• Via a dedicated online portal (see details below);
• Using an Estonian e-Residency card – in this case, the client signs the application for company registration digitally using special software and sends it to us, and we submit it to the Latvian Company Register on their behalf.

2. Personally:

• Through a notary in Riga during a personal visit.

If the company is registered by power of attorney with a personal visit, the fee for the services of a Latvian notary is added to the total cost.

If the SIA is registered remotely by power of attorney, the client additionally covers the costs of a notary in the country of signing, as well as translation into Latvian.

The most time- and cost-efficient option is registering a company in Latvia via the electronic portal or using an Estonian e-Residency card.

Step 1

To register a company in Latvia, we require certain documents and information from the client (a full list is provided below in the section "Documents Required for Company Registration in Latvia").

Once received, we prepare the company’s incorporation documents, which the shareholder will receive via email. By following the link to the pre-uploaded documents in the Latvian system, the client will be able to verify their identity and sign the documents electronically.

Upon selecting their country of citizenship, the system will automatically display the “SignicatID” button. By clicking it, the individual will go through a secure verification process, which includes verification of phone number, passport, FaceID, and receiving an SMS with a PIN code for signature confirmation.

The entire signing process takes no more than 15 minutes.

Once the documents are successfully signed, the system will generate a confirmation notification.

Step 2

The next step in the company registration process in Latvia is opening a temporary corporate bank account for the payment of the share capital.

We offer clients several options of financial institutions for opening this temporary account: a Latvian bank, or the Lithuanian payment institution Paysera.

• A temporary bank account in a Latvian bank can be opened remotely by using an electronic signature and with our on-site assistance in Riga. This service requires an additional fee, as it involves our representative physically visiting the banking institution on your behalf.
• In contrast, opening a temporary account with Paysera does not incur any extra cost and is fully supported by us free of charge.
  All that is required is to open a personal Paysera account via the mobile app and send a request to their support service. For example:

"I hold a personal account with Paysera. Currently, I am in the process of registering a company in Latvia, «____ SIA».  To complete this process, I need to open a temporary corporate account to deposit €___ (Please indicate the amount of share capital.) as share capital."

The decision to establish the company must be attached to the email «lemums».

Important: Once the temporary account is opened, you will need to make a payment from your personal account using the provided bank details with the following payment reference:
"iemaksa pamatkapitāla ___ (company name) SIA."

After the successful transfer of the share capital, it is necessary to obtain a bank statement confirming the payment and sign it electronically, just like the other incorporation documents.

Step 3

After the share capital has been deposited into the temporary account of the Latvian company, all signed incorporation documents, along with the bank statement, are submitted to the Company Register, and the state fee for the registration of an SIA in Latvia is paid.

Within a few days, the company will be officially registered, which can be verified through the Latvian Company Register and private information registry.

Immediately after the company is registered, it is necessary to proceed with the opening of a permanent corporate account — in our case, with Paysera. This requires completing the KYC (Know Your Client) procedure, which includes joining a video call with a Paysera representative and uploading at least one preliminary agreement with a future business partner.

Once this is completed, the share capital is transferred from the temporary account to the permanent corporate account, and the company is effectively ready to commence full business operations.

Step 4

To ensure the proper functioning of a company in Latvia, it is essential to engage the services of qualified accountants, with whom a formal service agreement is signed.

We guide the client through the process of obtaining access to the company’s online tax account, created by the Latvian tax authority, and transfer all necessary login credentials to the accountant for timely submission of tax returns.

The cost of accounting services in Latvia is determined individually, based on the nature of the business, the volume, and complexity of transactions carried out through the company’s accounts.

Step 5

Employment of the director, determination of the gross salary amount, registration of the director with the tax authority, signing of the employment contract, and obtaining a VAT (Value Added Tax) number.

• When applying for VAT registration in Latvia, the tax authorities require evidence of actual business activity and confirmation that the VAT number is needed not solely for the purpose of utilizing the “VAT Reverse Charge”mechanism (which allows avoiding VAT payment in practice).
  In other words, the company must provide contracts or other documentation proving that it is expected to meet the mandatory registration threshold in the near future.
• The VAT registration threshold in Latvia is EUR 50,000 and includes taxable goods and services. Export operations (e.g., sales to the United States) are not considered taxable turnover for this purpose.
• Additionally, if a company exceeds the registration threshold through a single transaction but does not carry out any further taxable supplies within the following 12 months, VAT registration is not required under Latvian legislation.

It is also necessary to rent an office and register it as a structural unit of the company, as well as to employ the director and register the company's website as an additional structural unit.

The tax authority may additionally request evidence of assets purchased by the company and clarification on how business activities are conducted.
For example, if the company does not own a computer, the tax office may question how it operates under modern business conditions.

Documents required for company registration in Latvia 

Registering a company in Latvia through the electronic portal is the most efficient solution, considering the speed and the absence of additional costs for notary services, document translation, and delivery.

To begin the process of registering a company in Latvia in the form of an SIA (Limited Liability Company), we require the following documents and information from the client:

1. High-quality copy of the international passport of each board member and founder;
2. Proof of residential address in English (e.g., bank statement or utility bill) for each board member and founder;
3. Amount of share capital (minimum EUR 1, but we recommend at least EUR 100);
4. Detailed description of the company’s planned activities, to determine the appropriate business classification code (NACE);
5. Three proposed company names, listed in order of preference.

Company Director in Latvia

In Latvia, a company director may perform their duties without receiving a salary if they are the sole owner or one of the founders of the company and are not formally employed under an employment contract. In such cases, no employment agreement is signed, and the company has no legal obligation to pay a salary to the director.

However, if the company’s monthly turnover exceeds EUR 3,500 and no employees are officially hired, it may trigger a tax inspection at the end of the year. The tax authority may argue that such income levels are unrealistic without any staff, and penalties may be imposed on the grounds of improper business structuring.

Therefore, in practice, hiring staff and paying at least the minimum wage is strongly recommended.

For 2026, the minimum gross monthly salary in Latvia is EUR 780.

Share Capital of a Latvian Company 

The standard minimum share capital for a limited liability company (SIA) in Latvia is EUR 2,800. At the time of registration, at least 50% of this amount (i.e., EUR 1,400) must be deposited into a temporary bank account. The remaining capital must be contributed within the company’s first year of operation. After registration, these funds may be used for the company’s business activities.

It is important to note that Latvian law also allows for the creation of micro-companies with reduced share capital, starting from as little as EUR 1.

These entities are known as SIA with reduced capital, and they are subject to specific requirements:

• Number of founders: No more than five individual persons;
• Management (Board Members): Only the founding shareholders may act as directors;
• Participation in other companies: The founders must not be shareholders in any other reduced-capital SIA.

Registered address in Latvia 

To register a Limited Liability Company (SIA) in Latvia, it is mandatory to have a legal address located within the territory of Latvia.

We provide both legal and virtual addresses for the purpose of establishing a Latvian company.

It is important to note that the legal address must be a real and existing location in Latvia, as it will be used for official correspondence with state authorities.

The cost of our legal address service includes mail reception and processing, and it varies depending on the type and location of the premises:

• Residential address;
• Commercial premises on the outskirts of Riga;
• Commercial premises in central Riga.

The virtual address is billed separately and is required for VAT registration.
A rental agreement for this address can also be issued and used for opening a bank account (in Latvia or in a payment institution).

This address will be considered as one of the essential elements of substance for the company.

Opening a bank account in Latvia 

• Latvian banks generally do not open accounts quickly and typically require the personal presence of the company’s representative (director).

In addition, Latvian banks often require documentary evidence of economic activity within the country, such as contracts with Latvian counterparties, presence of a registered office, and local employee on payroll.

• Payment institutions open accounts much faster than traditional banks and do not require Latvian counterparties or personal presence in Latvia to open a corporate account.

We recommend considering account opening with financial institutions such as Payoneer (known for its speed of account setup and payment processing, access to a dedicated manager, a wide range of supported currencies and Paysera (as previously discussed regarding the opening of both temporary and later permanent corporate accounts).

An important advantage of these systems is the ability to open accounts in the local currency (EUR) and pay taxes directly through local Latvian institutions.

Top 5 Most Popular Banks in Latvia:

1. Swedbank: The largest bank in Latvia, with assets exceeding EUR 5 billion. It offers a wide range of financial services for both private and corporate clients, including internet banking and investment products.
2. SEB banka: One of the leading universal banks in Latvia, providing retail and corporate banking services, asset management, and leasing. Known for its stability and high level of customer service.
3. Rietumu Banka: Specializes in serving corporate clients and high-net-worth individuals, offering tailored banking solutions, investment services, and asset management.
4. Citadele Banka: Offers a full range of banking services, including lending, deposits and card products. Actively develops digital services and mobile banking.
5. Luminor Bank: Formed as a result of the merger of Nordea and DNB banks, Luminor serves both private and corporate clients, offering modern banking solutions and financial products.

What documents does a Latvian bank require to open a corporate account?

Corporate documents:

• Statutory documents of the company (charter, memorandum of association);
• Certificate of registration of the company;
• Decision on the appointment of director(s);
• Documents confirming the ownership structure and distribution of shares.

Documents regarding the beneficial owner(s), shareholder(s) and director(s):

• Copies of passports or other identification documents;
• Proof of residential address (e.g. utility bills);
• Resume (CV) with a detailed description of professional experience;
• Documents confirming the source of funds.

General requirements for opening an account in a Latvian bank:

Banks may require confirmation of the company's real economic activity in Latvia (substance), including:

• The presence of an office in Latvia (for this we provide a virtual address service, as well as a lease agreement indicating the relevant address);
• Agreements with Latvian counterparties;
• An employed employee (director, for example).

Why should you contact TAXTERS to register a company in Latvia?? 

Registering a company abroad is an important step that requires in-depth knowledge of local legislation, tax and regulatory features.

TAXTERS, with over 12 years of experience, offers a comprehensive approach to resolving these issues. We support businesses at all stages - from consulting and selecting the best jurisdiction to registering a company and opening accounts in banks or payment systems.

Our team works with dozens of countries, using direct contacts with registration agents and financial institutions. This allows us to find the best solutions that take into account the specifics of your business. We help clients avoid potential risks and provide reliable support for entering the international market.

Before starting work, we always advise on the choice of jurisdiction, organizational and legal form, ownership structure and other key financial and corporate aspects. We offer not only registration services, but also a comprehensive analysis of your needs to create a long-term company development strategy.

Written by: Valeria Nevinchana, senior Lawyer; Pavlo Dubynskyi partner at Taxters. Information updated in February 2026